American Elephants

Milton Friedman Takes On the Minimum Wage by The Elephant's Child

The do-gooders believe that by passing a law saying that nobody shall get less than $9 per hour (adjusted for today) or whatever the minimum wage is, you are helping poor people who need the money. You are doing nothing of the kind. What you are doing is to assure, that people whose skills, are not sufficient to justify that kind of a wage will be unemployed.

The minimum wage law is most properly described as a law saying that employers must discriminate against people who have low skills. That’s what the law says. The law says that here’s a man who has a skill that would justify a wage of $5 or $6 per hour (adjusted for today), but you may not employ him, it’s illegal, because if you employ him you must pay him $9 per hour. So what’s the result? To employ him at $9 per hour is to engage in charity. There’s nothing wrong with charity. But most employers are not in the position to engage in that kind of charity. Thus, the consequences of minimum wage laws have been almost wholly bad. We have increased unemployment and increased poverty.

Moreover, the effects have been concentrated on the groups that the do-gooders would most like to help. The people who have been hurt most by the minimum wage laws are the blacks. I have often said that the most anti-black law on the books of this land is the minimum wage law.

There is absolutely no positive objective achieved by the minimum wage law. Its real purpose is to reduce competition for the trade unions and make it easier for them to maintain the higher wages of their privileged members.

4 Comments so far
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Are what you are saying is that without the minimum wage we would have full employment?

Are what you are saying is that if we did not have the minimum wage there would be more people working at ever McDonald’s at this time?

Does Mr. Friedman have any stats to back up his claim?

The minimum wage has been raised several times and I do not see a shortage of workers working those types. I do not see many ads looking for low skilled labor to fill all of those vacant janitorial slots or house maid slots at hotels.


Comment by Mark Baird

No, Mark, they’re not saying that without the minimum wage we would have full employment.

Yes, Mr. Friedman has the stats to back up his claim (unlike a lot of simpleton internet trolls, Friedman has been doing this 1) for a living, 2) for a while). If you want to find the source of his claims, why don’t you do a little research into his claims. It might enlighten you just a bit.

You may not see a shortage of workers to fill those types of jobs… probably because you are not in human resources, or trying to fill those types of jobs while maintaining a budget.

By the way… I happen to be a manager at a hotel. A good housekeeper is worth their weight in gold. Apart from the ones that are still in their probationary period, NONE OF THEM are considered low-skill, and none of them earn the minimum wage (before you take your logic to the next step… they’re getting raises). That kind of training also costs money.

I mean, don’t worry… your favorite burger joint is always going to have someone there to take your order… it’s just going to be less likely that it’s a high school or college student, and with all of the costs of the PPACA kicking in, there won’t be as many of them. Don’t think so? Try this; go down to your local McBurger joint around dinnertime and count the number of people working behind the counter… notice how, during the rush, the person expediting the food has to go out and clean the tables off? How there seems to be only one kid working a register when there are four stations? Ask the manager how many people they have working, and then how many they are going to send home immediately after the rush dies down. Pick any random employee and ask if they are short-staffed. Now repeat this process at the next three or four places you go.

Here’s a little math for you: you have six teenagers working for you at the current minimum wage of $7.25/hr. They are scheduled for a 5 hour shift ($7.25 x 5 = $36.25; $36.25 x 6 = $217.50) Now, raise the wage to $9.00 ($9.00 x 5 = $45.00; $45.00 x 6 = $270.00). Doesn’t look too bad… sell a few more burgers, understand that “you want fries with that” actually means something… except there’s a couple of supervisors and at least 3 managers that have to be paid as well. All that equipment has to be paid for as well as the food you’re eating (fun fact: at most pizza places the number one food cost is the pepperoni – which has almost doubled in price over the last 5 years; the cost of flour for the dough has almost tripled).

Other costs? How about uniforms? Property taxes? the furniture? The fees the owner pays to the company for the right to be called a Hardee’s or Wendy’s or Zaxby’s?

“The minimum wage has been raised several times and I do not see a shortage of workers…”

Which simply makes you sound like a typical liberal who doesn’t take the time to understand what’s involved so that you can know what it is you’re talking about.


Comment by Lon Mead

There is a point at which minimum wage defeats the original idea of hiring high school teenagers and summer hires with no experience. If i have to pay 9$ hr.minimum wage i want that person to have some experience in the work force.Minimum wage was never meant to be a livable wage it was for young people experiencing their first employment while their still in high school.


Comment by Mike Schirman (@hey_sherm)

Exactly. It has been called the Minority Youth Unemployment act. Obama wants the increase to go from (nationally) $7.25 and hour to $9 and then indexing the minimum to inflation. “Employers may get a more stable workforce due to reduced turnover and increased productivity,” Businessmen are slapping their heads and wondering why they didn’t think of that. (This is from yesterday’s WSJ) Most minimum wage workers are not the primary bread winner, and a full time minimum wage worker ears about $15,000 a year because he received $5,000 from the earned income tax credit. On top of that be will get benefits like food stamps, and Medicaid. After the last increase hit in July 2009, 600,000 teen jobs disappeared in the next 6 months. The overall teen jobless rate was 23.4% last month, and for black teenagers it’s over 30%.

Good intentions, but that’s why they talk about where the road paved with them leads.


Comment by The Elephant's Child

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